Big equity losses seen in Asia

Asia Market Update: Big equity losses seen in Asia; Aussie market drops >3% amid hotter inflation data; SGD rises after MAS surprise; Fed meeting also in focus [Jan 25-26th].

General trend

- Central Banks in focus (MAS, RBA, Fed).

- AU Q4 core CPI rose above the midpoint of the RBA’s inflation target range [2-3%]; AUD pared gain, Aussie yield curve flattened; Analysts continue to bring forward RBA rate hike calls.

- The next RBA meeting is Feb 1st (Tues); Will the RBA view CPI rise as sustainable? [quarterly wage price index is due Feb 23rd].

- AU business confidence weighed down by omicron.

- NZ Q4 CPI data due on Thurs (Jan 27th).

- JPY/KRW rises 0.5% [South Korea FX reforms in focus; North Korea and equity declines also focal points].

- 2-yr UST yield rose back above 1.00% ahead of Australia CPI data; US Fed decision remains in focus.

- Russia CDS widen amid focus on Ukraine and sanctions; Crude Oil FUTs rise.

- Shanghai Nickel trades limit down (-8%).

- US equity FUTS drop >1.2%.

- S&P ASX 200 REIT index drops on CPI data [Energy and Resources indices also lag]; Fortescue issued production update; Aussie markets are closed on Wed.

- Hang Seng TECH index drops >2%.

- Shanghai Composite declines >1% [Telecom Services, Industrial, IT and Property indices lag].

- CN/HK property sector M&A continues.

- Softbank Group drops >4%.

- Hyundai Motor earnings in focus.

- Companies due to report during the NY morning include Archer-Daniels-Midland, American Express, GE, JNJ, Lockheed Martin, 3M, PACCAR, Polaris, Raytheon, Verizon, Xerox.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened -0.2%.

- (AU) AUSTRALIA Q4 CPI Q/Q: 1.3% V 1.0%E; Y/Y: 3.5% V 3.2%E; CPI Trimmed Mean (core) Q/Q: 1.0% v 0.7%e; Y/Y: 2.6% v 2.3%e [annualized pace is the highest since 2014].

- FMG.AU Reports Q2 Iron Ore Shipments 47.5Mt v 46.4Mt y/y; Ore Mined 57.2Mt v 50.0Mt y/y.

- FCG.NZ Fonterra raises outlook for Farmgate milk prices to NZ$8.90-9.50 (prior: NZ$8.40-9.00); Affirms FY22 EPS 0.25-0.35.

- ILU.AU Reports Q4 total mineral sands production 218.7Kt v 291.5Kt y/y; Rev A$358.3M v 392.0M y/y.

- MYR.AU Reports 5-months to Jan 1 Sales +12.3% y/y.

- (AU) Australia Dec NAB Business Confidence: -12 v +12 prior; Conditions: 8 v 11 prior.

Japan

- Nikkei 225 opened -0.4%.

- (JP) Bank of Japan (BOJ) Gov Kuroda: Rising commodity prices larger factor in pushing inflation up, than a weaker yen, current weaker yen is not abnormal – parliament.

- (JP) Japan PM Kishida: Desirable to create positive cycle in which companies are able to pass along costs, wage increases and generate economic growth.

- (JP) Japan Economy Min Hagiuda: Confirms to begin giving gasoline subsidy to refiners.

- (JP) Japan Chief cabinet Sec Matsuno: Have expectations for companies to raise wages this Spring.

- (JP) Japan Dec Tokyo Condominiums for Sales Y/Y: -9.7% v +95.4% prior.

- (JP) Japan MoF sells ¥600B v ¥600B indicated in 0.70% 40-year JGBs, Yield at lowest accepted price 0.760% v 0.7250% prior, bid-to-cover: 2.57x v 2.37x prior.

Korea

- Kospi opened -0.2%.

- (KR) SOUTH KOREA Q4 PRELIMINARY GDP Q/Q: 1.1% V 1.1%E; Y/Y: 4.1% V 3.9%E; 2021 GDP Y/Y: 4.0% v 4.0%e ( 11 year high).

- 005490.KR Korea’s National Pension (largest shareholder) to vote in favor of split-off plan on Jan 28th - press.

- (KR) South Korea looking into possible firing of cruise missiles by North Korea at 8AM local time today - Korean press.

China/Hong Kong

- Hang Seng opened -1.6%; Shanghai Composite opened -0.4%.

- (CN) China Commerce Ministry (MOFCOM) Official Chen: Will promote continuous recovery of consumption in 2022; facing a grim foreign trade situation this year.

- (CN) Zhang Wenhong [seem as the Dr Fauci of China] said Shanghai should prepare for a scenario where caseload of COVID [is] 5 or ten times higher - Global Times.

- 3333.HK Announces progress of business: With advisors have initiated an active dialogue with offshore creditors, will need more time to assess number of potential solutions.

- (CN) China PBOC sets Yuan reference rate: 6.3418 v 6.3411 prior.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY150B in 14-day reverse repos v CNY150B prior; Net inject CNY50B v inject CNY50B prior.

- 1112.HK Will not proceed with planned 5-year USD bond offering.

- (CN) Mortgage rates in China are more affordable following rate cuts - Chinese press.

- (HK) Hong Kong locks down additional Kwai Chung building for 5 days due to covid, will give an update on covid curbs later this week.

Other

- (SG) SINGAPORE CENTRAL BANK (MAS): TO RAISE SLIGHTLY THE RATE OF APPRECIATION OF THE S$NEER POLICY BAND, Leaves width of band and level at which centered unchanged (unscheduled).

North America

- (US) US Antitrust Chief Kanter: DOJ should favor suing over settling merger cases, divestitures should be the exception and not the rule.

- IBM Reports Q4 $3.35 v $3.14e, Rev $16.7B v $16.0Be (ex Kyndryl spin off); Guides initial FY22 mid single digit Rev growth (cc), FCF $10.0-10.5B - earnings slides.

Europe

- (IT) Italian legislators unable to elect a new President in the first round, next vote on Tuesday.

Levels as of 00:15ET

- Hang Seng -1.6%; Shanghai Composite -1.5%; Kospi -2.8%; Nikkei225 -2.3%; ASX 200 -2.5%.

- Equity Futures: S&P500 -1.4%; Nasdaq100 -1.9%, Dax -0.8%; FTSE100 +0.5%.

- EUR 1.330-1.1309; JPY 114.10-113.68; AUD 0.7175-0.7129; NZD 0.6708-0.6669.

- Commodity Futures: Gold +0.0% at $1,842/oz; Crude Oil +0.5% at $83.73/brl; Copper -0.6% at $4.43/lb.